Meet HashFast, another Bitcoin miner manufacturer accused of fraud

5 arbitration cases and 2 lawsuits have been filed against HashFast this year.

SAN FRANCISCO—It’s hard to know what exactly is going on with HashFast, an embattled Bitcoin miner manufacturer. Since last summer, the company has made a series of promises that it has been unable to keep. Customers have become increasingly frustrated and, more recently, litigious.

Further Reading

As of early this month, there are a total of two federal lawsuits alleging fraud, along with five separate arbitration cases—the fifth one was filed just last week—that have been filed against HashFast. Two arbitration cases are scheduled to have case management conferences on Tuesday. By coincidence, HashFast is also under court order to respond by Tuesday to a federal lawsuit filed in Texas alleging breach of contract and fraud, among other accusations.

In the United States, arbitration is a type of alternative dispute resolution conducted outside of a courtroom—companies sometimes use it as a more private and faster alternative to the public judicial system. Many arbitrators are retired judges, but the exact procedural rules are different from case to case. Arbitration documents, unlike court filings, are not typically made public.

HashFast's mining hardware is nothing more than a little box with specialized chips designed specifically to compute hashes in the Bitcoin blockchain as a way to generate, or “mine,” new bitcoins. Rival firm Butterfly Labs has also been bogged down with similar delays, allegations of fraud, and lawsuits. It too has been less than transparent with its customers and with the media.

In August 2013, HashFast CTO Simon Barber stated publicly on the BitcoinTalk.org forum: “Orders are taken in BTC, in the unlikely event we get to refunds they will be given in BTC.” That did not happen. The company further said it would ship its “Baby Jet” 400 gigahash per second (GH/s) ASIC Bitcoin miner by October 2013. That also did not happen. Those miners did not ship until January 2014. By late April 2014, Barber, along with the company’s CEO Eduardo deCastro, issued an “apology to our customers.”

Despite these delays, HashFast is still taking orders for its “Yoli Evo (Batch 3)” mining board, which boasts a “maximum Bitcoin Mining Performance” of 800GH/s—a minimum order of five sells for $8,888.

A new website faithfully keeps a detailed timeline at hashfast.org, a site designed to “[expose] in a rational and irrefutable manner all of the lies and deception that HashFast used in order to sell overpriced products from August to December 2013.”

As more time goes by, bitcoins become harder to mine, which means that miners are worth less and less—and with bitcoins trading currently at around $450 (down from a high of nearly $1,200 in December 2013), HashFast’s customers are losing money.

To add to the mystery, there appear to be two corporate entities at play here: HashFast Technologies, legally (and physically) based in California, and HashFast LLC, legally based in Delaware. The precise nature of the relationship between the two firms is unclear.

Further, a Securities and Exchange Commission Form D (which often indicates that a company has raised venture capital) dated October 2013) lists the address of all five executive officers as 97 South 2nd St. Suite 175, San Jose, California.

That office building also houses the NextSpace co-working space in Suite 100. The San Jose address is different from the San Francisco address listed on the company website. HashFast’s Form D indicates that the company has issued over $641,000 to seven people as an equity stake, but it does not state how large such a stake is.

Neither HashFast nor its attorneys responded to repeated requests for comment except for a short e-mail from Amanda Van Nuys, a company spokeswoman.

“Thanks for reaching out,” she wrote. “Unfortunately we are not doing any media interviews right now. Best of luck on your story.”

Keeping the lights on—for now

According to the lawyer involved in bringing the arbitration cases, HashFast may be on the brink of collapse.

Further Reading

“My concern is that HashFast is or shortly will be insolvent,” Ray Gallo, an attorney based in San Rafael, just north of San Francisco, told Ars. Gallo is representing the claimants in three of the five arbitration cases.

“I can't think as to why they would be failing to pay even dollar refunds to people who were entitled to them. Having said that, my hope is that I will be able to get quick arbitration awards for our clients. I think it's crystal clear that they're entitled to their bitcoins.”

Ars’ recent visit to HashFast’s headquarters on Bush Street, just a short walk from San Francisco’s Embarcadero BART station, revealed what appeared to be a functioning company.

Last week, I walked right into the office on the sixth floor of a business tower. On a weekday afternoon, the receptionist was absent, but there appeared to be life at the company. Magazines, including The Economist, piled up on a coffee table in the waiting area.

Behind the reception desk was what appeared to be a Bitcoin miner with a tripod-mounted video camera and a hand-written note saying “Camera is live!” stuck to the side of the white box, which had a fan blowing onto it, likely to keep it cool.

Enlarge/ A Bitcoin miner set up behind the reception desk at HashFast headquarters in San Francisco.

Cyrus Farivar

Looking around, there appeared to be a near-company-wide meeting taking place, but I eventually found an employee who gave his name as “Paul” and said that he worked on customer service and was one of “10 to 12 employees.” He said that CEO Eduardo deCastro was in the office every day.

I left a business card with Paul, who assured me that it would go to one of the company's media representatives. I didn't receive a response.

Cyrus Farivar
Cyrus is the Senior Business Editor at Ars Technica, and is also a radio producer and author. His latest book, Habeas Data, about the legal cases over the last 50 years that have had an outsized impact on surveillance and privacy law in America, is due out in May 2018 from Melville House. Emailcyrus.farivar@arstechnica.com//Twitter@cfarivar